Buffalo Wild Wings, Inc. Announces Third Quarter 2008 Results

Buffalo Wild Wings, Inc. (Nasdaq: BWLD), announced today financial results for the third quarter ended September 28, 2008. Highlights for the third quarter versus the same period a year ago were:

• Total revenue increased 28.8% to $106.1 million

• Company-owned restaurant sales grew 30.3% to $95.5 million

• Same-store sales increased 6.8% at company-owned restaurants and 2.1% at franchised restaurants

• Net earnings increased 7.1% to $4.6 million from $4.3 million, and earnings per diluted share increased 4.2% to $0.25 from $0.24

Sally Smith, President and Chief Executive Officer, commented, 'We are very pleased with our strong same-store sales during the quarter, with increases of 6.8% at our company-owned and 2.1% at our franchised restaurants, which, with our strong performance in new units, fueled a revenue increase of nearly 29%. We opened twelve new company-owned and twelve new franchised units and completed the acquisition of our nine franchised restaurants in Las Vegas, making for a busy quarter. Percentage decreases in our cost of sales, operating and occupancy expenses for company-owned restaurants contributed to a 120 basis point improvement in restaurant-level performance over prior year. Likewise, we leveraged our general and administrative expenses by 100 basis points over last year, despite a $582,000 increase in stock-based compensation. These operating gains were offset by year-over-year increases in our preopening costs and loss on asset disposals and impairment charges, delivering net earnings growth of 7.1%, or earnings per diluted share of $0.25.'

Total revenue increased 28.8% to $106.1 million in the third quarter compared to $82.4 million in the third quarter of 2007. Company-owned restaurant sales for the quarter increased 30.3% to $95.5 million driven by a company-owned same-store sales increase of 6.8% and 39 more company-owned restaurants in operation at the end of third quarter 2008 relative to the same period in 2007. Franchise royalties and fees increased 16.5% to $10.6 million versus $9.1 million in the prior year. This increase was due to a franchised same-store sales increase of 2.1% and 35 more franchised restaurants at the end of the period versus a year ago.

Average weekly sales for company-owned restaurants were $42,400 for the third quarter of 2008 compared to $38,498 for the same quarter last year, a 10.1% increase. Franchised restaurants averaged $46,889 for the period versus $45,879 in the third quarter a year ago, a 2.2% increase.

For the third quarter, net earnings increased 7.1% to $4.6 million versus $4.3 million in the prior year. Earnings per diluted share were $0.25, as compared to third quarter 2007 earnings per diluted share of $0.24.

2008 and 2009 Outlook

Ms. Smith continued, 'Throughout 2008, we have had great same-store sales as well as improved restaurant-level cash flows and leveraging of general and administrative expenses. We have also invested time, energy and dollars to remodel, relocate, and update our existing units, which we feel is critical to the long-term success of the Buffalo Wild Wings brand, but which impacts our near-term results. The level of preopening costs and loss on asset disposals and impairment in the third quarter reflect this commitment. For the full year of 2008, we expect about 15% unit growth, over 25% revenue growth, and 20 to 25% net earnings growth.'

Ms. Smith added, 'We are confident in our ability to grow Buffalo Wild Wings in 2009 and beyond. We are also conservative given the current economic environment. In 2009, we are committed to our goal of 15% unit growth, with about 40% of the new unit growth expected to be company-owned restaurants, and our development pipeline for both company-owned and franchised restaurants is strong. Our enthusiasm for achieving our unit growth is only moderated by the current economy and the turmoil in the financial markets, and the impact on real estate development and availability of financing for developers and franchisees. We are committed to driving revenue growth, through strong same-store sales and increasing our average weekly sales volumes. And, we are committed to growing net earnings, through improving our restaurant-level performance and leveraging our general and administrative expenses. Based on achieving our unit growth goal of 15% in 2009, we would expect revenue to grow by about 25% and net earnings to grow by 20 to 25%.'

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